The Biden administration's rethink of gas exports is worrying Europe's "fragile" energy sector.
The White House said it was reviewing how it licenses gas exports, under pressure from climate campaigners. The US has overtaken Qatar as the world’s largest exporter of liquefied natural gas (LNG) thanks to increased production in the Gulf of Mexico and the Atlantic coast, becoming a key source of supply for Europe as it cuts back on Russian gas.
Five projects under construction will double the amount of liquefied natural gas produced in the southern waters of Texas, Louisiana, Mississippi, Alabama and Florida by 2026, according to the U.S. Energy Information Administration. But the billion-dollar gas projects have been the target of criticism from climate activists who say reliance on fossil fuels is causing global warming.
They have stepped up their attacks as President Joe Biden seeks re-election this year, so consulting firm Rapidan Energy Group predicts the Biden administration is unlikely to issue any new LNG export permits before the election.
An LNG storage facility in Texas, US on February 11, 2023. Photo: Reuters
Politico said the development was the latest example of how US policy priorities — in this case reducing dependence on fossil fuels — can cause headaches for European leaders.
According to the EuroGas Association - a group of 77 European energy companies and associations - the European Union's imports of Russian gas last year were 60 billion cubic meters, or less than a third of the 155 billion cubic meter output in 2021. Didier Holleaux, Chairman of EuroGas, said liquefied natural gas (LNG) is a way out for Europe and contributes to stabilizing electricity prices after a period of record highs.
The EU is the world’s largest LNG buyer. The region has invested billions of dollars in building import infrastructure, adding six new terminals since early 2022 as part of its efforts to wean itself off Russian gas. By 2030, Europe is expected to be able to receive more than 400 billion cubic meters of LNG, up more than 25% from the year before the Ukraine conflict.
Since January 2022, US LNG exports to Europe have increased by about 8.7% per month, helping to wean the continent off Russian energy. Without US LNG, Europe’s political support for Ukraine might have declined as its citizens struggled with power shortages, according to the WSJ .
To survive the two years since Russia cut off gas supplies, Europe has had to cut consumption and turn to LNG, much of it from the US, which supplied nearly 20% of the EU and UK’s total gas last year, up from 5% in 2011, said Tom Marzec-Manser, head of gas analysis at commodity intelligence firm ICIS. “That’s a big increase,” he said.
A senior EU official said the bloc’s leaders would not speculate on whether the U.S. would cut LNG sales to Europe because Washington had not yet announced any. Meanwhile, Ali Zaidi, President Biden’s national climate adviser, declined to elaborate on how the assessment would be made or whether it would result in the Department of Energy delaying LNG export permits.
The US and EU both pledged at last month’s climate summit in Dubai to begin a “transition away from fossil fuels.” But that has done little to change America’s position as the world’s largest oil and gas producer, or to ease Europe’s thirst for American fuel.
Europe has no deadline for phasing out gas despite ambitious plans to reach carbon neutrality by 2050, said Tom Marzec-Manser of ICIS. He predicted the continent would need to continue buying US gas for the next decade.
Eurogas President Didier Holleaux said many of the new LNG import terminal projects in Europe are based on the assumption of a stable long-term supply relationship with the U.S. “If additional U.S. LNG export capacity does not materialize, it risks widening and prolonging the global supply imbalance and causing price volatility,” he said.
Last year, Rice University’s Baker Institute for Public Policy analysis of shifting supply warned that European countries risked developing a new dependency, as they did with Moscow. The report found that European importers were realizing this and were moving away from long-term contracts with US suppliers. But this also had the downside of leaving Europe vulnerable to future supply disruptions or squeezes.
In a letter to Biden administration officials, Eurogas urged the US to avoid an “unnecessary ban” on LNG exports to Europe as the ally seeks to gradually reduce gas imports from Russia.
Asian business groups have also weighed in. The Singapore-based Asian Energy and Natural Gas Producers and Buyers Association wrote to US Energy Secretary Jennifer Granholm, saying LNG helps Asia transition away from coal. The group expressed concerns about the US commitment to maintaining supplies.
Europe won’t be left without power if the US slows down on approving new LNG export licenses, said Leslie Palti-Guzman, head of market intelligence at Synmax. But after that, any significant slowdown could prompt European companies to turn to Qatar, which is also planning to significantly expand its LNG business. “There’s less certainty about where the next supplies will come from and the routes to ship them,” he said.
Phien An ( according to Politico, Reuters, WSJ )
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